Quantifying Market and Non-market Benefits and Costs of Hydraulic Fracturing in the United States: A Summary of the Literature
2017
Loomis, John | Haefele, Michelle
We quantify the monetary market and non-market environmental benefits and costs of hydraulic fracturing in the 14 U.S. states whose oil and gas production is dominated by hydraulic fracturing. By far the largest market benefit is $75 billion ($46–$95 billion) in consumer surplus from lower natural gas prices to residential, commercial, and industrial consumers. There are also environmental benefits resulting from the switch by some electric utilities from coal to natural gas ($13.25 billion, range $3.9–$21.9 billion). However, there are also substantial environmental costs associated with hydraulic fracturing. These are dominated by $27.2 billion ($12.5–$41.95 billion) health damages from air pollution. Costs also include $3.8 billion ($1.15–$5.89 billion) in greenhouse gas emissions, $4 billion ($3.5–$4.45 billion) in wildlife habitat fragmentation, and $1 billion ($0.5–$1.6 billion) in pollution of private drinking water wells. Opportunity costs of water usage and property value losses are less than one-quarter of a billion dollars. The market and non-market benefits of hydraulic fracking are widespread geographically but many of the non-market costs are concentrated in the areas of drilling, creating a distributional disconnect that we believe drives much of the controversy over hydraulic fracturing.
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